The Bancorp, Inc. Reports Fourth Quarter and Fiscal 2017 Financial Results

Wilmington, DE – January 25, 2018 – The Bancorp, Inc. ("The Bancorp") (NASDAQ: TBBK), a financial holding company, today reported financial results for the fourth quarter and full year 2017.

Highlights

·	Fourth quarter and full year  pre tax income of $10.2 million and $40.4 million , respectively, from continuing operations

·	Net interest income increased 7% to $26.7 million for the quarter ended December 31, 2017, compared to $25.0 million for the quarter ended December 31, 2016.

·	Net interest margin increased to 3.11% for the quarter ended December 31, 2017, compared to 2.84% for the quarter ended December 31, 2016.

·	Loans increased 14% to $1.39 billion at December 31, 2017, compared to $1.22 billion at December 31, 2016.

·	Security backed lines of credit ("SBLOC") increased 16% to $730.5 million at December 31, 2017, compared to $630.4 million at December 31, 2016.

·	Direct lease financing increased 9% to $378.0 million at December 31, 2017 compared to $346.6 million at December 31, 2016.

·	Small Business Administration ("SBA") loans increased 9% to $401.9 million at December 31, 2017, compared to $369.8 million at December 31, 2016.

·	The rate on average deposits and interest bearing liabilities of $3.71 billion in the fourth quarter of 2017 was 0.45% with a rate of 0.56% for $2.05 billion of average prepaid card deposits.

·	Assets held for sale from discontinued operations decreased 16% to $304.2 million at December 31, 2017, compared to $360.7 million at December 31, 2016.

·	Consolidated leverage ratio was 7.9% at December 31, 2017, after the deferred tax adjustment relating to the tax reform reduction in the corporate tax rate.

·	Book value per common share at December 31, 2017 was $5.81 per share.  The Bancorp and its subsidiary, The Bancorp Bank, remain well capitalized.

Damian Kozlowski, The Bancorp's Chief Executive Officer, said, "2017 was a year of accomplishments and transition for The Bancorp.  We made significant progress in reducing the risk of  the institution and greatly enhancing productivity and efficiency while setting the necessary conditions for future success."

 

While fourth quarter income before tax for continuing operations amounted to $10.2 million, a fourth quarter 2017 loss resulted from an additional tax provision of  approximately $18 million resulting from the legislative change in tax rates applied to deferred tax assets. While the statutory federal rate was reduced from 34% to 21%, which reduced the carrying value of deferred tax assets, future income will be taxed at the 21% rate.  The Bancorp reported net loss of $12.4 million, or $0.22 loss per diluted share, for the quarter ended December 31, 2017, compared to a net loss of $28.7 million, or $0.52 loss per diluted share for the quarter ended December 31, 2016.  For full year 2017, Bancorp reported net income of $21.7 million, or $0.39 earnings per diluted share, compared to a net loss of $96.5 million, or $2.17 loss per diluted share, in full year 2016. The impact of deferred tax adjustments which reduced net income in 2017 is shown in the footnotes for return on assets and return on equity in the table section of this release. Income from continuing operations does not include any income which may result from the reinvestment of the proceeds from sales or repayment of the remaining assets in The Bancorp's discontinued operations.  Tier one capital to assets, tier one capital to risk-weighted assets, total capital to risk-weighted assets and common equity-tier 1 ratios were 7.90%, 16.75%, 17.11% and 16.75%, respectively, compared to well capitalized minimums of 5%, 8%, 10% and 6.5%, respectively. In connection with the pending sale of a Florida mall property, a charge of $3.0 million was recorded in discontinued operations in the fourth quarter of 2017. The following is a reconciliation of pre tax income to adjusted operating earnings, a non-GAAP measure which reflects the financial impact of that charge:

 

 

(1)

As a supplement to GAAP, Bancorp has provided this non-GAAP performance measure. Bancorp believes that this non-GAAP financial measure is useful because it allows investors to assess its operating performance.  Management utilizes adjusted operating earnings to measure the combined impact of changes in net interest income, non-interest income and certain other expenses.  Other companies may calculate adjusted operating earnings differently.  Although this non-GAAP financial measure is intended to enhance investors' understanding of Bancorp's business and performance, it should not be considered, and is not intended to be, a substitute for net income calculated pursuant to GAAP.

Conference Call Webcast

You may access the LIVE webcast of The Bancorp's Quarterly Earnings Conference Call at 8:00 AM ET Friday, January 26, 2018 by clicking on the webcast link on Bancorp's homepage at www.thebancorp.com. Or, you may dial 844.775.2543, access code 5485438.  You may listen to the replay of the webcast following the live call on The Bancorp's investor relations website or telephonically until Friday, February 2, 2018 by dialing 855.859.2056, access code 5485438.

About The Bancorp

The Bancorp, Inc. (NASDAQ: TBBK) is dedicated to serving the unique needs of non-bank financial service companies, ranging from entrepreneurial start-ups to those on the Fortune 500. The company's only subsidiary, The Bancorp Bank (Member FDIC, Equal Housing Lender), has been repeatedly recognized in the payments industry as the Top Issuer of Prepaid Cards (US), a top merchant sponsor bank and a top ACH originator. Specialized lending distinctions include National Preferred SBA Lender, a leading provider of securities-backed lines of credit, and one of the few bank-owned commercial vehicle leasing groups in the nation. For more information please visit www.thebancorp.com.

Forward-Looking Statements

Statements in this earnings release regarding Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. These statements may be identified by the use of forward-looking terminology, including but not limited to the words "may," "believe," "will," "expect," "look," "anticipate," "estimate," "continue," or similar words.  For further discussion of the risks and uncertainties to which these forward-looking statements may be subject, see Bancorp's filings with the SEC, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of those filings. These risks and uncertainties could cause actual results to differ materially from those projected in the forward-looking statements. The forward-looking statements speak only as of the date of this press release. The Bancorp does not undertake to publicly revise or update forward-looking statements in this press release to reflect events or circumstances that arise after the date of this presentation, except as may be required under applicable law.

The Bancorp, Inc. Contact

Andres Viroslav

215-861-7990

aviroslav@thebancorp.com

 

The Bancorp, Inc.
Financial highlights
(unaudited)
		Three months ended								Year ended
		December 31,								December 31,
Condensed income statement		2017				2016				2017				2016
		(dollars in thousands except per share data)
Net interest income		$	26,687			$	24,978			$	106,680			$	89,966
Provision for loan and lease losses			770				1,550				2,920				3,360
Non-interest income
Service fees on deposit accounts			1,893				1,789				6,788				5,124
Card payment and ACH processing fees			1,722				1,343				6,318				5,526
Prepaid card fees			14,095				11,993				53,367				51,326
Gain on sale of loans			384				2,092				17,919				2,901
Gain on sale of investment securities			636				40				2,231				3,171
Change in value of investment in unconsolidated entity			-				(25,220	)			(20	)			(37,533	)
Leasing income			575				551				2,663				2,007
Affinity fees			100				1,056				1,545				4,563
Gain on sale of health savings accounts			-				-				2,538				-
Loss from sale of European prepaid card operations			-				-				(3,437	)			-
Other non-interest income			744				710				1,636				5,401
Total non-interest income			20,149				(5,646	)			91,548				42,486
Non-interest expense
Losses and write downs on other real estate owned			-				-				19				-
Bank Secrecy Act and lookback consulting expenses			-				5				-				29,081
One time fee to exit data processing contract			-				-				1,136				-
Civil money penalty			(210	)			-				2,290				-
Other non-interest expense			36,095				42,123				151,469				169,492
Total non-interest expense			35,885				42,128				154,914				198,573
Income (loss) from continuing operations before income tax expense			10,181				(24,346	)			40,394				(69,481	)
Income tax expense (benefit)			23,513				2,557				23,056				(12,664	)
Net income (loss) from continuing operations			(13,332	)			(26,903	)			17,338				(56,817	)
Discontinued operations
Income (loss) from discontinued operations before income taxes			(1,429	)			(5,044	)			4,059				(43,117	)
Income tax benefit			(2,326	)			(3,278	)			(276	)			(3,442	)
Net income (loss) from discontinued operations, net of tax			897				(1,766	)			4,335				(39,675	)
Net income (loss) available to common shareholders		$	(12,435	)		$	(28,669	)		$	21,673			$	(96,492	)
Net income (loss) per share from continuing operations - basic		$	(0.24	)		$	(0.49	)		$	0.31			$	(1.28	)
Net income (loss) per share from discontinued operations - basic		$	0.02			$	(0.03	)		$	0.08			$	(0.89	)
Net income (loss) per share - basic		$	(0.22	)		$	(0.52	)		$	0.39			$	(2.17	)
Net income (loss) per share from continuing operations - diluted		$	(0.24	)		$	(0.49	)		$	0.31			$	(1.28	)
Net income (loss) per share from discontinued operations - diluted		$	0.02			$	(0.03	)		$	0.08			$	(0.89	)
Net income (loss) per share - diluted		$	(0.22	)		$	(0.52	)		$	0.39			$	(2.17	)
Weighted average shares - basic			55,759,372				55,419,204				55,686,507				44,567,357
Weighted average shares - diluted			56,656,710				55,790,543				56,176,269				44,776,138
For loss periods the weighted averages shares - basic is used in both the basic and diluted computations.

 

Balance sheet		December 31,				September 30,				June 30,				December 31,
		2017				2017				2017				2016
		(dollars in thousands)
Assets:
Cash and cash equivalents
Cash and due from banks		$	3,152			$	5,813			$	6,458			$	4,127
Interest earning deposits at Federal Reserve Bank			841,471				328,023				475,387				955,733
Securities sold under agreements to resell			64,312				65,095				65,076				39,199
Total cash and cash equivalents			908,935				398,931				546,921				999,059
Investment securities, available-for-sale, at fair value			1,294,484				1,196,956				1,149,116				1,248,614
Investment securities, held-to-maturity			86,380				86,402				93,419				93,467
Loans held for sale, at fair value			503,316				380,272				542,819				663,140
Loans, net of deferred fees and costs			1,392,228				1,374,060				1,370,263				1,222,911
Allowance for loan and lease losses			(7,096	)			(7,283	)			(7,353	)			(6,332	)
Loans, net			1,385,132				1,366,777				1,362,910				1,216,579
Federal Home Loan Bank & Atlantic Community Bancshares stock			991				991				6,211				1,613
Premises and equipment, net			20,051				21,087				22,004				24,125
Accrued interest receivable			10,900				10,131				10,880				10,589
Intangible assets, net			5,377				5,185				5,515				6,906
Other real estate owned			593				-				-				104
Deferred tax asset, net			34,802				53,017				53,226				55,666
Investment in unconsolidated entity			74,473				107,711				120,862				126,930
Assets held for sale from discontinued operations			304,170				314,994				336,246				360,711
Other assets			78,543				51,164				53,888				50,611
Total assets		$	4,708,147			$	3,993,618			$	4,304,017			$	4,858,114
Liabilities:
Deposits
Demand and interest checking		$	3,806,965			$	3,113,212			$	3,437,482			$	3,816,524
Savings and money market			453,877				452,183				438,602				421,780
Total deposits			4,260,842				3,565,395				3,876,084				4,238,304
Securities sold under agreements to repurchase			217				180				273				274
Subordinated debenture			13,401				13,401				13,401				13,401
Long-term borrowings			42,323				42,482				42,680				263,099
Other liabilities			67,214				32,699				40,560				44,073
Total liabilities		$	4,383,997			$	3,654,157			$	3,972,998			$	4,559,151
Shareholders' equity:
Common stock - authorized, 75,000,000 shares of $1.00 par value; 55,861,150 and 55,419,204 shares issued at December 31, 2017 and 2016, respectively			55,861				55,860				55,858				55,419
Treasury stock (100,000 shares)			(866	)			(866	)			(866	)			(866	)
Additional paid-in capital			363,196				362,340				361,478				360,564
Accumulated deficit			(89,484	)			(77,850	)			(85,114	)			(111,941	)
Accumulated other comprehensive loss			(4,557	)			(23	)			(337	)			(4,213	)
Total shareholders' equity			324,150				339,461				331,019				298,963
Total liabilities and shareholders' equity		$	4,708,147			$	3,993,618			$	4,304,017			$	4,858,114

 

 

 

		Three months ended				Year ended
		December 31, 2017				December 31, 2017
Net income (loss) available to common shareholders		$	(12,435	)		$	21,673
Add:
Q4 deferred tax adjustment: change in rate due to tax reform			18,000				18,000
Subtract:
Q2 reversal of deferred tax valuation allowance			-				(10,940	)
Adjusted net income available to common shareholders		$	5,565			$	28,733
Divided by:
Average assets			4,057,807				4,164,344
Adjusted ROA (1)			0.55	%			0.69	%
		Three months ended				Year ended
		December 31, 2017				December 31, 2017
Net income (loss) available to common shareholders		$	(12,435	)		$	21,673
Add:
Q4 deferred tax adjustment: change in rate due to tax reform			18,000				18,000
Subtract:
Q2 reversal of deferred tax valuation allowance			-				(10,940	)
Adjusted net income available to common shareholders		$	5,565			$	28,733
Divided by:
Average equity			331,806				311,557
Adjusted ROE (1)			6.71	%			9.22	%